02165cam a22002537 4500001000700000003000500007005001700012008004100029100002200070245011400092260006600206490004200272500001900314520105400333530006101387538007201448538003601520690009501556690006601651710004201717830007701759856003801836856003701874w10163NBER20150303180405.0150303s2003 mau||||fs|||| 000 0 eng d1 aBuiter, Willem H.10aHelicopter Moneyh[electronic resource]:bIrredeemable Fiat Money and the Liquidity Trap /cWillem H. Buiter. aCambridge, Mass.bNational Bureau of Economic Researchc2003.1 aNBER working paper seriesvno. w10163 aDecember 2003.3 aThe paper provides a formalisation of the monetary folk proposition that fiat base money is an asset of the holder but not a liability of the issuer. The issuance of irredeemable fiat base money can have pure fiscal effects on private demand. With irredeemable fiat base money, weak restrictions on the monetary policy rule suffice to rule out liquidity trap equilibria - equilibria in which all current and future short nominal interest rates are at their lower bounds. In a model with flexible prices, liquidity trap equilibria cannot occur as long as the private sector does not expect the monetary authority to reduce the nominal money stock to zero in the long run. In a New-Keynesian model out provided the private sector expects the authorities not to reduce the nominal stock of base money below a certain finite level in the long run. Liquidity trap equilibria can exist if and for as long as the private sector expects that the monetary authorities will ultimately reverse any current expansion of the monetary base in present value terms. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aE31 - Price Level • Inflation • Deflation2Journal of Economic Literature class. 7aE41 - Demand for Money2Journal of Economic Literature class.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w10163.4 uhttp://www.nber.org/papers/w1016341uhttp://dx.doi.org/10.3386/w10163